ASU's Murphy files complaint over condo scheme

The coach who took Arizona State University's baseball team to the College World Series multiple times says he lost nearly $100,000 in a real-estate scam during the Valley's housing boom.

Patrick Murphy has filed a complaint in U.S. District Bankruptcy Court seeking to recover his losses from a Gilbert man who orchestrated a condo-rehab scheme that Arizona regulators called fraudulent and in violation of state securities laws.

Murphy also is asking the federal judge to hold former ASU athletics compliance officer John Park and his wife, former ASU head volleyball coach Patti Snyder-Park, responsible for the $100,000, saying they convinced him to put his money into the project.

The couple deny they are responsible for Murphy's loss and stress that Park, not his wife, handled most of the dealings with Murphy. The couple were not named in an Arizona Corporation Commission finding against the Gilbert man, Dean Severns.

Snyder-Park said she and her husband also lost about $100,000 and have no idea why Murphy singled them out.

"We were victims, too," she said. "We can't comprehend why we have been named."

Severns declined comment except to say that he did not believe that Park and Snyder-Park had anything to do with his investment companies and should not be named in an action directed at him.

The case revolves around several companies owned by Severns, who was fined $150,000 in penalties and ordered to repay investors nearly $3.5 million last year after the Corporation Commission found he was fraudulently selling unregistered promissory notes.

The commission said Severns sold investors on a plan to purchase a Mesa apartment complex and resell it as condominiums. As part of his Millionaire Bound Investment Group, he offered investors up to 14 percent annual returns.

"Many of the MBIG investors were unsophisticated and inexperienced in investing," Corporation Commission regulators said in filings to shut down Severns' companies. "Severns used a reference to Mother Teresa, biblical quotes and his own pursuit of money to discuss investing."

Regulators said Severns told investors that he did not need or want their money and that he had access to $200 million through his own mortgage broker.

"Many of the investors did not have readily available funds to invest," regulators said in the order, explaining that investors borrowed against their homes' equity or tapped retirement accounts to buy promissory notes.

In 2006, Severns used investors' money to buy the apartment complex but none of the investors were listed on the deed. Regulators say he also contracted to buy a second complex and two other properties using investor money.

According to corporation records, Severns changed the names of his companies multiple times and created a "power team" concept, where old investors were encouraged to bring in new investors. But when investors asked for payment on their promissory notes, Severns tried to stall them with offers of new notes, better interest rates, employment or payment when the project was refinanced, commission records say.

Regulators say once the project refinanced, Severns did not pay investors. They say he used investor funds instead to pay operating expenses for other companies he was involved in, as well as personal car loans, mortgages, travel and purchase of a vacation property.

In December, Severns consented to the commission's order to cease doing business and to pay fines and restitution. He did not admit guilt.

Three months later, in March, Severns and his wife filed for a Chapter 7 bankruptcy, listing the commission's restitution order as one of their debts.

Corporation Commission spokeswoman Rebecca Wilder said that federal law does not allow an individual to dissolve such fines through bankruptcy. The commission's order states that any attempt by Severns to file bankruptcy will be considered an act of default.

In his complaint, Murphy is asking the court to intervene in Severns' bankruptcy and not discharge the $99,933 that he put up as an investment.

In his complaint, Murphy accused John Park of "exploiting (his) religious convictions and beliefs" by persuading him that the man behind the project was a Christian whose personal wealth was in the tens of millions of dollars. Murphy said John Park suggested he take out a loan against his home.

Murphy is four-time Pac-10 Coach of the Year, including the past three years when ASU finished first in the conference. He has taken ASU to the College World Series in three of the past five years.

Murphy referred all questions about the case to his lawyer, who did not return calls.

Murphy's complaint, which is called an adversary proceeding, asks the court to make Park and his wife equally responsible for the $99,933 that he paid to Severns. Murphy asks that Severns, Park and Snyder-Park be ordered to pay an unspecified amount of compensatory and punitive damages and his attorney fees.

Park, who now owns a business helping people choose investment plans, monitored ASU athletic programs' compliance with NCCA rules from 1990 to 1998. Snyder-Park is a real- estate agent.

The couple said they anticipate a quick resolution in court.

They said they are shocked that their longtime friendship with Murphy has devolved into a bitter legal dispute.